It may be April Fool’s Day, but the real prank may be on the American people
when they begin to see that the dollars in their pockets buy less and less. The U.S.
government has borrowed too much. Nations like China, Japan, Saudi Arabia, and others
aren’t buying our debt. The only alternative is for the U.S. government to crank up the
printing presses at the Federal Reserve.

I have been reading columns by others who are saying the same thing. Consider
the words of George Will. He said that an “embarrassing auditor of American
misgovernment is China, whose premier has rightly noted the unsustainable trajectory of
America’s high-consumption, low-savings economy. He has also decorously but clearly
expressed sensible fears that his country’s $1 trillion-plus denominated assets might be
devalued by America, choosing, as banana republics have done, to use inflation for
partial repudiation of improvidently incurred debts.”

Some of the printing of money has already begun. The Federal Reserve is buying
billions in Treasury bonds and has also spent billions more in buying sub-prime
mortgages in order to remove them from the balance sheets of banks. Inflation will
increase as more of this fiat money makes it way into the economy.

Pat Buchanan says that: “inflation is theft. It makes liars and cheats of
governments. By eroding the value of a currency, inflation punishes savers and creditors
and rewards debtors. And what nation is the biggest debtor of all? The United States of
America.”

He is right. Inflation devalues the cash in your pocket, the savings in your bank,
and the investments that you hold. The dollars you spend are worth less, and the
investments you have will be paid back in devalued dollars. Inflation is not only theft but
a form of robbery perpetrated by the government. On this April Fool’s Day, it turns out
that inflation is the biggest prank of all.